It looks as though Ken Kutaragi was right when he stated
that the PS3, which will be priced at $499 and $599 respectively in the United
States, is probably "too cheap."
According to a new cost analysis by iSuppli, Sony will lose $307 for every 20GB
PS3 it sells and $241 for each 60GB version. "With Sony taking a
smaller loss on the higher-end model, it's not a surprise the company is
steering customers to the 60Gbyte version," said iSuppli. For the United
States, 20GB PS3s will account for 20% of the sales mix
while the 60GB versions will take the remaining 80%.

Although its initial losses with the PS3 will be large, Sony
co-chief operating officer Jack Tretton points out that the original PS and the
PS2 became "incredibly" profitable after taking massive losses at
launch.

iSuppli summed up it results
by stating “While many fret over the high cost and price of the PlayStation 3
compared to the competition, iSuppli believes the console provides more processing
power and capability than any consumer electronics device in history. Because
of this, the PlayStation 3 is a great bargain, well worth its $599 price and
$840.35 cost, iSuppli believes."

Microsoft, which was once seeing red to the tune of $153
per unit sold, is now making a profit of $75.70 on each console before
marketing and distribution costs a year after launch.